november-2009

092 BUSINESS
For more information on
local currencies, visit
www.smallisbeautiful.org
GO MAGAZINE NOVEMBER 2009
community with its own currency may be
more apt to support a restaurant that accepts
local currency instead of a chain restaurant
that doesn’t. This encourages more of the
area’s chefs to enter the marketplace with
entrepreneurial ventures.
Millions of Ithaca HOURS have been
traded between the city’s locally owned
companies over the last 18 years, and
HOURS grants have been issued to more
than 100 community organizations, including
groups that support urban agriculture
and the rights of workers. Several area
businesses in need of loans have received as
much as $30,000 worth of HOURS interestfree:
A city credit union was able to build
a new headquarters, a movie theater got a
paint job, and several farmers rode out difficult
crop seasons without going bankrupt.
“With a local currency, we not only have
more money, but also more control over
what money does,” Glover says. “It allows
money to be invested into programs locally,
which strengthens the economy.”
Of course, just as no two cities are exactly
alike, no two local currencies work precisely
the same way. The BerkShares program,
for example, teams up with five local banks
that swap federal currency for local bills. If
someone arrives at one of these banks with
$95 US dollars, he or she can walk away with
$100 worth of BerkShares, a way of rewarding
people for using the currency.
Ithaca HOURS, on the other hand, does
not back its money with federal dollars;
rather, it issues HOURS to participating
businesses, individuals and nonprofits (the
number issued depends on the size of the
recipient) in exchange for being listed in their
directory, which costs from $10 to $40 annually.
Those businesses then spend HOURS
with other merchants in the directory.
Despite the differences between local
currencies, the national laws guiding them
remain the same: The money must be paper
(no coins) and must not resemble the US
dollar, and business owners must pay income
and sales tax on the bills. In the case of Ithaca
HOURS, the amount a business receives
during a taxable transaction is counted as
taxable income at $10 per HOUR.
Proponents of local currencies say the
system encourages face-to-face communication.
Instead of ordering a book online,
a customer must go to the local bookstore.
Not only does this allow the customer to
judge the quality of the bookstore in person,
it also gives him or her a chance to network,
perhaps encouraging the bookstore owner
to one day patronize the business of his
customer. “The marketplace has always had
a role greater than just transacting,” Glover
says. “It’s where people intersect and get to
know each other.”
That intersection can foster a sense of
camaraderie, a feeling that no matter how
tough the times, everyone is in it together.
Moria Reynolds owns a small business
in Hood River, OR, which participates
in a four-county currency system called
RiverHOURS (www.riverhours.org). She
allows clients who want to pay her in RiverHOURS
to do so, then uses those bills
to buy food from the local market, clothes
from the boutique down the street or as
a tip for the baristas at her favorite coffee
shop. “I feel a strong sense of community
with the businesses I exchange River-
HOURS with,” she says.
As idyllic as local currencies may
sound, even the biggest proponents of the
concept admit it can’t work everywhere. If
a town is filled with big-box stores and a
revolving-door citizenry, local bills may not
be feasible. “In the Southern Berkshires, we
have about 80 restaurants, and only four are
chains,” says Witt, who also serves as the
executive director of the E.F. Schumacher
Society, a think tank that promotes strong
local economies. “Small, independent business
owners make up the fabric of our local
economy, and they’ve figured out how to
work BerkShares into their businesses.”
It also takes time and patience for a local
currency to have a palpable effect on an
(top left) BerkShares,
currency in Southern
Berkshires; (right) Ithaca
HOURS.